In the last few days, there has been a growing buzz about Tesla's likely entry into India. Bloomberg recently reported that the Elon Musk-owned electric car maker was likely to start by shipping several thousand units to India and begin selling in Mumbai, Delhi and Bengaluru later this year. The news had weighed on Mahindra and Tata Motors, with investors worrying over the kind of impact Tesla would have on the homegrown companies, which have big electric vehicle plans of their own.
Kumar Rakesh, auto analyst at BNP Paribas Securities India, believes Tesla's India entry will be a non-starter without a low-cost model.
"We expect Tesla's entry into India to be slow and measured given the low average price point in the market," said the analyst.
Reports have indicated that the government was likely to slash import duties on premium EVs to 15 per cent from 110 per cent, provided companies achieved designated investment and production targets.
Tesla on its part has talked of an affordable model that will cost under $30,000 model with incentives.
ALSO READ: Elon Musk-helmed Tesla likely to launch India EV sales by April: report
Rakesh pointed out that even if Tesla does manage to produce and sell at $30,000, it will still be considered expensive for mass volume in India, once we consider the additional custom duties.
He also believes that local production won’t make sense unless Tesla can reduce the price to below $30,000 to allow for mass volumes in India.
Tesla had last year shelved its low-cost Model 2 plans, shifting focus to robotaxi. Rakesh says its unlikely that the company may revive these plans for India.
Nomura's analyst Kapil Singh too doesn't see Tesla's potential entry hurting Indian car makers.
"As per our estimates, Tesla's starting price in India for Model 3 may be ₹5 million plus (₹50 lakh) and go up to ₹12 million (₹1.2 crore) for Model S Plaid. Tesla will largely compete with luxury car OEMs in India as it does globally," said Singh. The company may want to build its brand by initially bringing in its best products to India, he believes.
Singh also noted that Indian car makers will be eligible for production-linked incentive benefits of up to 15 per cent and will therefore remain cost-competitive.
"Indian OEMs have built strong competencies over the years and have demonstrated market share gains across segments versus global competitors," he said.
